Comments on: Bailouts and Corporatism

By: Barbara Karkutt

Barbara Karkutt — Fri, 29 Oct 2010 22:46:44 +0000

The spillover from the financial sector into the general economy would not have been as severe if market corrections for the “toxic assets” had been valued properly.
You do understand that no one knew the value of these toxic assets and here is the reason why:
“Fourth, and probably most importantly, mortgages were repackaged as mortgage-backed securities (MBS). Banks had hired sophisticated “quant jocks” who wrote computer programs that could repackage these MBS into high risk and low risk product bundles. The computer programs were so complicated that no one really understood what exactly was in each product bundle or how much of the bundle had subprime mortgages. When times were good, it didn’t matter, and everyone bought the high risk bundles because they gave a higher return. As the housing market declined, however, everyone knew that these products were losing value but, since no one other than the computer programs understood them, the resale value of the products was unclear.

Last but not least, many of the purchasers of these MBS were not just other banks, but individual investors, pension funds and hedge funds. This meant that the risk was spread throughout the economy. Furthermore, since hedge funds are not regulated by the SEC, they could use derivatives to borrow money to make investments. This created higher returns in a good market, and greater losses in a bad one, thus magnifying the impact of any downturn.” “However, to some extent, the financial crisis was caused by financial innovation that outstripped human intellect. The potential impact of new products, like MBS and derivatives, were not understood even by the quant jocks who created them”
They still cannot be valued.
Looking forward to seeing you after the Rally

By: Callahan Campaign Spies on Towne Hall | TowneForCongress.com | Jake Towne for US Congress, PA-15

Thu, 15 Jul 2010 18:04:07 +0000

[...] into oblivion to the detriment of the people and the benefit of government-sponsored cartels like Wall Street bankers, health care insurance, and the military-industrial [...]

By: China Devalues US Treasury Bonds | TowneForCongress.com | Jake Towne for US Congress, PA-15

Wed, 14 Jul 2010 01:17:30 +0000

[...] to ask any questions below, I’ll do my best to answer, further suggested reading is my “Bailouts and Corporatism” and “Federal Reserve” planks. You can help my campaign take on the Republocrats by making [...]

By: The Peace Freedom & Prosperity Movement » Blog Archive » Chinese Devalues US Treasury Bonds

Wed, 14 Jul 2010 01:14:28 +0000

[...] suggested reading is my “Bailouts and Corporatism” and “Federal Reserve” [...]

By: Sound Money and Jobs Plank | TowneForCongress.com | Jake Towne for US Congress, PA-15

Fri, 25 Jun 2010 01:30:09 +0000

[...] people to government bureaucrats, the military-industrial complex, recipients of foreign aid, and bailouts to corporations like AIG, GM, and Goldman Sachs. These select groups then have the advantage of using it first [...]

By: Remember, Remember the Fifth of November!! | TowneForCongress.com | Jake Towne for US Congress, PA-15

Tue, 22 Jun 2010 02:02:21 +0000

[...] have a constitutional republic based on the rule of law. The mental misfits of Congress who award bailout after bailout and are willing sponsors of state-sponsored corporatism must be removed from [...]

By: Jake Townes Statement on Joe Stack and the IRS Austin Plane Crash | TowneForCongress.com | Jake Towne for US Congress, PA-15

Tue, 22 Jun 2010 01:37:47 +0000

[...] practices of the IRS and Congress (a theme of the Taxed Enough Already, aka TEA party movement) and government-sponsored crony capitalism (a theme commonly associated by the media with the political left). In his [...]

By: Sound Money and Jobs | TowneForCongress.com | Jake Towne for US Congress, PA-15

Sat, 19 Jun 2010 03:42:17 +0000

By: Afghanistan War | TowneForCongress.com | Jake Towne for US Congress, PA-15

Sat, 19 Jun 2010 03:38:38 +0000

[...] must be far more wary of the reckless spenders who support the Warfare-Welfare state, the FED and corporatist bailouts than of desperate bands starving in caves on the opposite side of the world. The American republic [...]

By: Who Supports Bailouts? Jake Towne, Charlie Dent, or John Callahan? | TowneForCongress.com | Jake Towne for US Congress, PA-15

Thu, 17 Jun 2010 14:29:15 +0000

[...] have been emphatically against bailouts and corporatism not only since the start of my campaign last year but since they were passed in October 2008. However, the government-sponsored [...]